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Holston v. Pennsylvania Higher Education Assistance Agency

United States District Court, D. New Jersey

September 30, 2019

MARY ANN HOLSTON, also known as MARY ANN HOLDEN, Plaintiff,
v.
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, doing business as FEDLOAN SERVICING, Defendant.

          MARY ANN HOLSTON Plaintiff appearing pro se

          JOHN CHRISTOPHER GRUGAN ELEANOR BRADLEY HUYETT BALLARD SPAHR ANDREWS & INGERSOLL LLP On behalf of Defendant

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This matter concerns tort and consumer fraud claims by Plaintiff arising out of the Public Service Loan Forgiveness Program (“PSLF Program”). Presently before the Court is the motion of Defendant, Pennsylvania Higher Education Assistance Agency (“PHEAA”), which services the PSLF Program, to dismiss Plaintiff's claims against it. For the reasons expressed below, Defendant's motion will be granted. Plaintiff will be afforded twenty days to file an amended complaint.

         BACKGROUND

         Although not expressly delineated in numbered counts per se, Plaintiff Mary Ann Holston asserts three claims, one statutory and two common law torts. Starting with the last claim first, the third claim (Docket No. 1-1, Complaint, para 46-51) asserts that in its administration of the PSLF Program, PHEAA has violated the New Jersey Consumer Fraud Act (“NJCFA”) N.J.S.A. 56:8-1, et. seq. The Complaint also claims “tortious interference with expectancy, ” (Docket No. 1-1, Complaint, para 27-38) and negligent misrepresentation (Id. at para 39-45).

         Under the PSLF Program, 20 U.S.C. § 1087e(m), which was enacted on October 1, 2007, the U.S. Department of Education may forgive the remaining balance of William D. Ford Federal Direct Loans (“Direct Loans”) after a borrower satisfies several requirements, including that the borrower must make 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer, such as government and not-for-profit organizations.

         On February 28, 2018, in the Consolidated Appropriations Act, 2018, Congress provided limited, additional conditions under which a borrower may become eligible for loan forgiveness under the PSLF Program if some or all of the payments were under a nonqualifying repayment plan. The U.S. Department of Education has referred to this as the Temporary Expanded Public Service Loan Forgiveness (“TEPSLF”) opportunity.

         Plaintiff claims that she has a qualifying Direct Loan in the original amount of $62, 000 on which she began repayment in 2001. On February 11, 2008, Plaintiff began working for the City of New York, which is a qualifying employer, and as of February 11, 2018, Plaintiff had completed 120 payments. In 2013, Plaintiff had transferred her loans to PHEAA, which Plaintiff claims was required in order to become eligible for the PSLF Program.[1]

         Plaintiff claims that she filed the application for loan forgiveness under the PSLF Program, but she was denied on June 23, 2018. Plaintiff claims that she subsequently applied for TEPSLF, but that application was denied on November 11, 2018.

         Plaintiff claims that she relied on PHEAA to provide her with truthful and accurate information about her loan repayment option, but “PHEAA did not provide proper information about what repayment plan Plaintiff should be in to qualify for the PSLF or TEPSLF.” (Docket No. 1-1 at 6.) For her 10 years of payments, Plaintiff was in the graduated repayment plan, rather than an income-driven repayment plan required by the PSLF Program and TEPSLF.[2] Plaintiff's PSLF and TEPSLF applications were denied on this basis. Because PHEAA intentionally, negligently, and fraudulently “gave inaccurate and misleading information about the repayment plans and eligibility for PSLF” (Id. at 9) over the course of five years, Plaintiff claims that she has suffered damages in the amount of the balance of the principal and interest that should have been forgiven under PSLF and TEPSLF had she been in the appropriate qualifying repayment plan.

         PHEAA has moved to dismiss Plaintiff's claims, arguing that Section 1098g of the Higher Education Act (“HEA”) expressly preempts Plaintiff's claims, or otherwise bars them under a theory of conflict preemption, and there is no private cause of action under HEA. PHEAA also contends that Plaintiff's ultimate recourse is a claim against the U.S. Department of Education pursuant to the Administrative Procedures Act, 5 U.S.C. § 702. PHEAA further argues that Plaintiff's claims are insufficiently pleaded and fail to state any cognizable claims. Plaintiff has opposed PHEAA's motion, mainly arguing that the HEA does not preempt her consumer protection-based state law claims. Plaintiff also argues that her claims are sufficiently pleaded.

         DISCUSSION

         A. Subject matter jurisdiction

          PHEAA removed this action from the Superior Court of New Jersey, Chancery Division, Burlington County to this Court pursuant to 28 U.S.C. § 1442. PHEAA services student loans issued by the federal government under the William D. Ford Direct Loan Program, 20 U.S.C. § 1087a et seq., and under the Federal Family Education Loan Program, 20 U.S.C. § 1071 et seq. PHEAA also administers the Public Service Loan Forgiveness Program. It is therefore a “federal officer” under 28 U.S.C. § 1442(a)(1), which provides for removal of any “civil action . . . against or directed to . . . any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or relating to any act under color of such office . . . .”[3]

         B. Standard for Motion to Dismiss

         When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).

         “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do . . . .” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (citations omitted) (first citing Conley v. Gibson, 355 U.S. 41, 47 (1957); Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994); and then citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).

To determine the sufficiency of a complaint, a court must take three steps. First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Third, “whe[n] there are well-pleaded factual allegations, a court should ...

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